Private Limited Company Registration

Introduction of Private Limited Company
A Private Limited Company Registration in Jaipur is a company that is privately held for small businesses. The liability of the members of a Private Limited Company is limited to the number of shares respectively held by them. Shares of Private Limited Company cannot be publicly traded. All the aspects of a Private Limited Company are discussed in the article.
Characteristics of Private Limited Company
1. Members– To start a company, a minimum number of 2 members are required and a maximum number of 200 members as per the provisions of the Companies Act, 2013.
2. Limited Liability– The liability of each member or shareholder is limited. It means that if a company faces a loss under any circumstances, then its shareholders are liable to sell their assets for payment. The personal, individual assets of the shareholders are not at risk.
3. Perpetual succession– The company keeps on existing in the eyes of law even in the case of death, insolvency, the bankruptcy of any of its members. This leads to the perpetual succession of the company. The life of the company keeps on existing forever.
4. Index of members– A private company has a privilege over the public company as it doesn’t have to keep an index of its members whereas the public company is required to maintain an index of its members.
5. Several directors– When it comes to directors a private company needs to have only two directors. With the existence of 2 directors, a private company can come into operation.
6. Paid-up capital– It must have a minimum paid-up capital of Rs 1 lakh or a higher amount which may be prescribed from time to time.
7. Prospectus– A prospectus is a detailed statement of the company affairs that is issued by a company to its public. However, in the case of a private limited company, there is no such need to issue a prospectus because the public is not invited to subscribe to the shares of the company.
8. Minimum subscription– It is the amount received by the company which is 90% of the shares issued within a certain period. If the company is not able to receive 90% of the amount, then it cannot commence further business. In the case of a private limited company, shares can be allotted to the public without receiving the minimum subscription.
9. Name– All private companies must use the word private limited after their name.

Benefits Of Private Limited Companies
When it comes to starting a company, there are a few options to choose from. The most common are Sole Trader, Partnership, and Private Limited Company. There are many advantages of a private limited company, so it is the most popular option. Here we will be discussing the benefits of a Private Limited Company.

1. Limited Liability
The most significant advantage of a private limited company is that the owners have limited liability. This means that the shareholders' assets are protected if the company goes into liquidation. If the company goes bankrupt, the owners are only liable for the amount they have invested in the company. Any company's money remains with the company and does not fall on the owners' shoulders. This can be a significant advantage for new businesses as it protects their assets from potential business failures. One of the key benefits of setting up as a private limited company is limited liability.
2. Tax Efficient
Private limited companies are tax efficient as they can claim corporation tax relief on their profits. This can be a significant saving for businesses and increase profits. In addition, private limited companies can pay dividends to their shareholders, which are also taxed at a lower rate. In addition, there are several other tax advantages available to companies, such as capital allowances and R&D tax credits.
3. Separate Legal Entity
A private limited company is a separate legal entity from its shareholders and directors. This means that the company can contract with other businesses and individuals and is liable for its debts. In other words, creditors cannot seek direct payment from the personal assets of the business's owners in case of debts or bankruptcy on behalf of the business. The only money that can be claimed directly in the company's obligations and not those incurred by its owners on behalf of the business is shareholders. This can be essential protection for the shareholders as it limits their liability.
4. Easier to Raise Capital
Raising capital for a business can be challenging, and private limited companies are becoming increasingly popular as they attract investors into the business more due to their credibility. This can be done through issuing new shares, taking out loans, or issuing bonds. In addition, it is often easier to approach high-net-worth individuals for funding when operating under a private limited company. This is because these potential investors do not require an active role in the day-to-day management of the business, unlike shareholders in public companies.

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